Mitsui Sumitomo Insurance, Aioi Nissay Dowa Insurance to Enter Merger Discussions
Tokyo – Mitsui Sumitomo Insurance Co. and Aioi Nissay Dowa Insurance Co., two of Japan’s largest non-life insurance firms, are poised to commence merger discussions. The Yomiuri Shimbun has learned that the companies are aiming to finalize the merger by April 2027. This strategic move is intended to cut administrative costs and enhance product offerings to drive overall growth.
Buildings of Mitsui Sumitomo Insurance Co., left, and Aioi Nissay Dowa Insurance Co., which are expected to soon start merger discussions
Once the merger is complete, the new entity will become Japan’s leading non-life insurance provider, signaling the final phase of an industry reorganization that has been ongoing for the past quarter-century. The merger decision was made at a board meeting held on Friday by MS&AD Insurance Group Holdings, Inc., the parent company of both Mitsui Sumitomo and Aioi Nissay Dowa. Following this, both companies are scheduled to formally approve the start of merger discussions.
A special secretariat will be established to address key aspects of the merger, including the merger ratio, the new company’s name, and the location of its headquarters. If the merger proceeds, the companies’ combined domestic net premiums written, which is similar to net sales, would total ¥2.99 trillion for the fiscal year ending March 2024. This surpasses the ¥2.41 trillion in domestic net premiums written by Tokio Marine & Nichido Fire Insurance Co., the current market leader.
The companies plan to quickly reduce duplicate business expenses and transition to a more efficient profit-generating structure. They also intend to leverage their respective expertise to develop unique insurance products. These strategies are responses to a challenging business environment for domestic non-life insurance.
Market conditions have become increasingly difficult due to a declining birthrate and an aging population. In addition, factors like the dwindling interest in cars among younger demographics, combined with rising car repair costs and more frequent natural disasters, have led to increased insurance payouts. The merger is also a strategic move to expand the company’s scale and increase its competitiveness.
Mitsui Sumitomo and Aioi Nissay Dowa have a history of collaboration, having integrated their management under MS&AD Holdings in 2010. Mitsui Sumitomo has a strong corporate clientele, particularly from the Mitsui and Sumitomo groups. Aioi Nissay Dowa has close ties with Nippon Life Insurance Co. and Toyota Motor Corp., with a strong presence in personal automobile insurance. Since 2010, the two companies have been expanding their businesses under a strategy of “reorganization by function,” focusing on their respective areas of expertise to meet customer needs.
The two companies have been working to integrate their systems, including insurance payments, since 2010. With this integration expected to be mostly complete by the end of fiscal 2025, the decision to discuss a merger became viable. The domestic non-life insurance industry has seen significant restructuring since 2000 due to increased competition from liberalization. Currently, the top four companies—Tokio Marine & Nichido, Sompo Japan Insurance Inc., Mitsui Sumitomo, and Aioi Nissay Dowa—collectively hold over 80% of the market share.
